BJ’s Restaurants, Inc. — Form 10-Q Summary
Period clarification: The request metadata says 2020 Q3, but the filing is for the 13 and 39 weeks ended September 27, 2022, compared with September 28, 2021.
Business context and financial results
BJ’s operated 214 company-owned restaurants in 29 states as of October 31, 2022. The filing covers its casual-dining restaurants and related proprietary craft beer operations. Amounts below are in millions except per-share data and percentages.
| Metric | Q3 2022 | Q3 2021 | 39 weeks 2022 | 39 weeks 2021 |
|---|---|---|---|---|
| Revenue | $311.3 | $282.2 | $939.8 | $795.8 |
| Operating income (loss) | $(5.2) | $(7.0) | $(9.7) | $(8.5) |
| Net income (loss) | $(1.6) | $(2.2) | $0.1 | $1.1 |
| Diluted EPS | $(0.07) | $(0.09) | $0.00 | $0.04 |
| Operating margin | (1.7)% | (2.5)% | (1.0)% | (1.1)% |
For the 39 weeks, operating cash flow was $33.8 million, capital expenditures were $51.0 million, and cash declined $19.3 million to $19.2 million. The company reported $50.0 million of long-term debt, $17.1 million of letters of credit, and $147.9 million available under its $215 million revolving facility. The facility matures in November 2026; the company reported covenant compliance. Current liabilities exceeded current assets by $123.0 million; current ratio was 0.3:1.0. Operating lease obligations totaled $473.2 million, current and long-term combined.
Changes versus comparable periods
- Q3 revenue rose 10.3%; comparable restaurant sales increased 8.9%, from guest traffic growth of about 4.2% and average-check growth of about 4.7%.
- For the 39 weeks, revenue increased 18.1% and comparable sales rose 16.9%, including traffic growth of about 11.9% and average-check growth of about 5.0%. Management attributed much of the traffic increase to dining-room reopenings versus 2021 restrictions.
- Q3 operating loss narrowed year over year, while the 39-week operating loss widened. The year-to-date net result also fell from $1.1 million of income to $0.1 million, despite a $12.1 million income tax benefit.
- Year-to-date cost of sales increased to 27.4% of revenue from 26.2%, and labor and benefits increased to 38.0% from 36.6%. Occupancy and operating costs improved to 24.0% from 24.7%; depreciation and amortization declined to 5.6% from 6.9%.
Outlook, risks and unusual items
- Management estimated fiscal 2022 capital expenditures of approximately $90–$95 million, including plans for as many as six new restaurants and remodels. Four restaurants had opened and two closed as of October 31, 2022; one additional restaurant opened shortly after quarter-end. The company expected to fund net capital expenditures with cash, operating cash flow and its credit line.
- Management said current cash and cash equivalents should be adequate for capital expenditure and working-capital needs for at least 12 months, based on current operations. No earnings or comparable-sales forecast was provided.
- Management cited elevated food, labor, energy and operating costs, hiring challenges, and possible supply-chain disruptions. It said menu pricing, purchasing practices and productivity improvements had partly offset cost increases, but future offsets and customer acceptance of pricing are uncertain.
- In the 39-week period, the 101.0% effective tax benefit rate was primarily associated with FICA tip credits. The comparable 2021 period also included a $3.1 million Employee Retention Tax Credit, affecting year-over-year labor-cost comparisons.
- The company repurchased about 91,000 shares for $2.4 million during the 39 weeks, with $22.1 million remaining under its authorization. Quarterly cash dividends remained suspended. Ordinary-course legal matters were not expected by management to materially affect financial position, results or liquidity, though outcomes remain uncertain.
Important facts for investors to verify
- Confirm the reporting-period discrepancy: this filing is for 2022, not 2020 Q3.
- Assess whether menu pricing and traffic can offset persistent food and labor inflation without weakening demand or margins.
- Track operating cash flow, capital spending, cash balances, and revolver usage as restaurant expansion proceeds.
- Review restaurant opening plans and results against the approximately $90–$95 million fiscal 2022 capital expenditure estimate.
- Evaluate the sustainability and composition of the unusually high interim tax benefit and the effect of prior-period credits on comparisons.